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House of Commons

Thursday 19 January 2006

The House met at half-past Ten o'clock


[Mr. Speaker in the Chair]



Oral Answers to Questions


The Secretary of State was asked—

Post Office

1. Mr. Desmond Swayne (New Forest, West) (Con): If he will make a statement on the future of the Post Office. [43225]

The Secretary of State for Trade and Industry (Alan Johnson): Our ambition is for a publicly owned Royal Mail fully restored to good health and providing customers with an excellent service and its employees with rewarding employment.

Mr. Swayne: How is that ambition affected by the reality that the 4.5 million users of the Post Office card account are going to lose that service in 2010 when funding is withdrawn?

Alan Johnson: The present contract ends in 2010, as it was always intended to do. There need to be discussions between the Department for Work and Pensions and the Post Office to see how the situation will emerge post-2010.

Mr. David Drew (Stroud) (Lab/Co-op): It is good to hear what my right hon. Friend says, but will he assure us that any ideas from the Post Office on creating share ownership among members, for example, will not be a form of back-door privatisation? It provides a crucial public service, which is vital to rural areas as well as urban Britain, and it is important that the Government stick to their manifesto commitment that it is a publicly owned service. Does he agree?

Alan Johnson: I do agree. I made an absolute, unequivocal commitment: we are not privatising Royal Mail. What we are looking at—it is not a huge issue in
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the scheme of things, incidentally, given the other problems that the Post Office faces—is whether we can develop an employee share trust, in which the employees can only sell the shares back into the trust, as part of a way of incentivising the work force. It is right that we should consider that and see the merits of it but without in any way making it a route towards privatisation.

Mr. Owen Paterson (North Shropshire) (Con): There are 8,000 rural sub-post offices serving 12 million customers a week. If the card account is to die in 2010, the time that it will have existed will be shorter than the time it took to set up. The Government have already removed £400 million from rural post offices. What is the timetable for possibly renewing the card? Who will be consulted? When will the Minister make a proper statement in the House on this huge issue?

Alan Johnson: I hope that the hon. Gentleman will congratulate the Government on what we have done for rural post offices. The simple problem that we face is this: years ago, the only place someone could buy a stamp, post a parcel or collect a pension was through the post office, but since the Conservatives rightly introduced the ability for people to receive their pensions and benefits by direct payment, there has been a slow decline of post offices, with 3,000 rural post offices closing between 1979 and 1997.

Rather than death by a thousand cuts for the post office network, we have tried to get a grip of the problem by ensuring that it has a properly computerised network and by introducing a £150 million subsidy of taxpayers money every year to protect the rural network to allow it to make the transition from the old days, when it was the only place people could buy a stamp and collect a pension, to the 21st century, when only 23 people a week use the 800 smallest rural post offices and every customer who uses them leads to a £6 loss. That is a problem that serious politicians have to tackle in a serious way. That is what we will attempt to do.

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab): Is the Secretary of State satisfied that, with the closure and rationalisation programme for rural and urban post offices advancing so fast in areas like mine in Harborne, where people queue for almost an hour to use the local post office, the Post Office has a grip on how best to organise itself?

Alan Johnson: The starting point for getting a grip on the problem was the report by the performance and innovation unit, welcomed on both sides of the House, in 1999–2000. It said that there was a serious problem with the rural network, which required Government protection, but for the urban network—6,000 post offices—it was for the Post Office to deal with the National Federation of Sub-Postmasters to find a way in which sub-postmasters could make a decent living. The simple fact was that there were too many post offices in urban areas for sub-postmasters to make a decent living. Members on both sides of the House thought that the report was excellent. Those discussions took place, and the NFSP and the Post Office agreed to urban rationalisation. As a result, 2,500 urban post offices closed, but 99 per cent. of the population are still within 1 mile of a post office. I regret the fact that that
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may have caused problems in my hon. Friend's constituency, but I think that it was the right thing to do, painful though it was. Governments have to make painful decisions when looking at a problem on the scale faced by the post office network.

Charles Hendry (Wealden) (Con): We have always regarded the Secretary of State as somebody who is in touch with the common people right across the country, but he seems to be missing a trick. What he has suggested is death by a thousand cuts, as 4,000 post offices have closed in the past eight years, which is more than the number that closed in the previous 20 years. There is serious concern about the future of the network. It has been suggested that car tax should be renewed online; the Government have set up passport offices, which will lead to a £12 million loss for post offices; and the future of the post office card account is at risk. Does he not understand that small post offices are the core of their local communities, and if they go, a valuable part of the local community goes as well?

Alan Johnson: I struggle to find a suggested policy different from our own. Yes, post offices have closed—I have just explained why 2,500 closed—but not a single rural post office has closed unless it has been impossible to find a sub-postmaster or impossible to find a venue for the post office. Otherwise, there is a system of no avoidable closures, and the Government have introduced £150 million of subsidy every year, because we recognise that post offices are an essential part of the country's social fabric. However, that does not mean that they have a right to exist if people are not using them. The crucial issue is how we can find new areas of work for the Post Office. We have had some success, but there is still further to go.

Mr. Alan Reid (Argyll and Bute) (LD): People can only use post offices if the Government give business to them. All that we hear is bad news. Passport business has been taken away from the Post Office, and vehicle excise duty has been encouraged to go online, and thus away from the Post Office. The guaranteed no-avoidable-closures policy ends this year. When will the Government do something practical to help to keep rural post offices open by giving them more business?

Alan Johnson: Dear, dear, dear. The hon. Gentleman said that we have only ever heard bad news. We spent £500 million under project Horizon computerising every single post office in the country. We set up the universal banking facility, and 21 million customers can now access their current account through the Post Office. The Post Office is now the biggest user of bureaux de change in the country and, incidentally, it plays a huge role in online shopping. There is good news in abundance, and Opposition politicians ought to look for it, as a genuine transformation is taking place under this Government.

MG Rover Taskforce

2. Richard Burden (Birmingham, Northfield) (Lab): What assessment he has made of the work of the MG Rover taskforce. [43226]
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The Secretary of State for Trade and Industry (Alan Johnson): The MG Rover taskforce worked extremely well co-ordinating the response to the collapse of MG Rover. By 10 January, 3,587 ex-employees from MG Rover and its supply chain identified by Jobcentre Plus had found new jobs. 1,922 have received training and of these 966 have now found jobs. The wage replacement scheme has saved 1,329 jobs from 170 companies in the supply chain.

Richard Burden: May I thank my right hon. Friend for his reply, and add my tribute to colleagues on the taskforce and in the agencies involved for the great amount that they have achieved since the company collapsed? However, does he agree that there are still many individuals without jobs, particularly among people living closest to the Longbridge plant? There is an urgent need to regenerate south-west Birmingham and the surrounding areas. As the taskforce will produce its final report in the not-too-distant future, does he share my concern that there must be a clear strategy to pursue the ongoing task with monitoring mechanisms so that we can all be clear who is responsible for what and to make sure that they carry out their responsibilities properly?

Alan Johnson: I pay tribute to my hon. Friend. His work at the Longbridge plant has been exceptional. The work that he has done with the taskforce and with local communities is applauded, as I know from my visits to the community. As to what happens next, we provided a three-year plan and money to go with it. I am well aware that despite the statistics that I just gave, which are very encouraging nine months on, there is an awful lot left to do. In the area around the plant, to which my hon. Friend referred, there is a problem of a serious fear of long-term unemployment creeping in. I am advised by the taskforce that it is concentrating attention now on piloting an employability support package to help those most vulnerable to long-term unemployment, specifically in the area that my hon. Friend mentions. I agree that we need a programme for the rest of the three-year project so that we attack the real areas of deprivation and the core problems around the Longbridge plant.

Daniel Kawczynski (Shrewsbury and Atcham) (Con): I, too, should like to congratulate the hon. Member for Birmingham, Northfield (Richard Burden) on the tremendous work that he has done. However, the impact of the closure has affected many areas outside Birmingham, including in Shrewsbury. I have met companies and individuals who continue to be affected by the closure. Will the Secretary of State give me an assurance that he is monitoring the help that places outside Birmingham get from the taskforce?

Alan Johnson: I will give the hon. Gentleman that assurance. The regional development agency, Jobcentre Plus, the learning and skills council and Birmingham city council, which I know is not his area—all those participants in the task force—are well aware that the problem has ramifications further away from Longbridge. We will be looking at Shrewbury and other areas that are more peripheral to the Longbridge plant. That is an essential part of the taskforce's work.
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Dr. Brian Iddon (Bolton, South-East) (Lab): The first car that I ever bought was a second-hand Issigonis-designed Mini. I have driven cars from that group of companies all my life until my present car, which is an MG ZT. I can tell my right hon. Friend that that is the finest car that I have ever driven, so I am saddened at the demise of MG Rover. My concern is that the finest engineering skills that we have in Britain should be preserved in the engineering industry. How much success has the taskforce had in securing engineering jobs for the excellent engineers who were working in that group?

Alan Johnson: I would always buy a second-hand car from my hon. Friend. One of the great successes of the taskforce, although perhaps it did not take a great deal of effort, was that within two months of the closure of Longbridge, 1,600 highly skilled engineers had been found jobs with other companies, such as Airbus. Highly skilled manufacturing jobs came to Longbridge very quickly. The problem is not with the highly skilled engineers, but with the less highly skilled workers who need to be retrained. It may take longer to find them jobs, but highly skilled engineers were quickly hoovered up.

Mr. Alan Duncan (Rutland and Melton) (Con): Anything that can be done by the taskforce to alleviate the hardship caused to so many people by the collapse of Rover can only be welcomed. What lessons have the Government learned from that whole sorry saga? What is their estimate of the number of people who would have had a substantial payout instead of the next to nothing that they now have, had the right hon. Member for North Tyneside (Mr. Byers) not intervened and forced through the wrong deal for Rover six years ago?

Alan Johnson: Once again—this has been rehearsed a few times—hindsight gives us the benefit of 20:20 vision. I do not remember anybody from any part of the House being anything other than congratulatory when the Phoenix company stepped in to rescue volume production at Longbridge. [Interruption.] The hon. Member for Rutland and Melton (Mr. Duncan) says from a sedentary position that he was critical, but that was probably on the basis that there was an alternative. I think that that is the gist of his argument. May I remind him that the Government had nothing to do with Alchemy dropping off the scene? Alchemy could not reach agreement with BMW. That is why there was no other option.

Mr. Duncan: In my recollection—we were opposite numbers at the time—that most definitely is not the case. The Alchemy proposal would have provided many in the Rover work force with up to £80,000 in redundancy payments and given the company a good chance of long-term survival as a niche manufacturer. The taskforce exists because the previous Secretary of State intervened just before a general election and deluded people into thinking that it was a good deal, but those people now have no company, no job and no pension. Would the Secretary of State have done the same as his predecessor?

Alan Johnson: I shall put it on the record once again: Alchemy could not reach agreement with BMW and there was no Government intervention whatsoever.
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When we considered the opportunity to keep volume car production at Longbridge and save 6,000 jobs, no hon. Member stood up and said, "We should asset-strip Rover and put the workers out of work—they will have a big package." No one knew what was to come in five or six years' time, so I think that it was worth the effort to try to keep jobs at Longbridge. What has happened—it is turning into a saga—is fully on the public record: the National Audit Office is reporting on the matter; I have referred it under the Companies Act 1989; and the Trade and Industry Committee is investigating. I would be surprised if any of those bodies reach any conclusion other than that my right hon. Friend the Member for North Tyneside (Mr. Byers) did the right thing at the time.

Mr. Lindsay Hoyle (Chorley) (Lab): I was a member of the Select Committee at that time, and Alchemy's evidence was clear: it said that a big Rover organisation had no future and that the way forward was small production of MG sports cars for a limited market. The rest of the company would have been sold off and developed, which would not have saved jobs. Does the Secretary of State agree that Phoenix was the only real deal on the table?

Alan Johnson: I agree completely with my hon. Friend, who has put my point from a different perspective—that of the Select Committee.

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